2008 - Emile Woolf writes

The great credit collapse: what have we learnt

  Sir Thomas Gresham was a formidable figure in the late 16th Century. He built the Royal Exchange, the most fabulous commercial building of its day. Modeled on the Antwerp Bourse, it contained 150 small shops, making it one of the world’s first shopping malls. Yet its chief virtue was that, for the first time, […]

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Meltdown in financial markets: the inexorable day of reckoning has dawned

I am writing on 30 September, the day the headlines proclaimed a meltdown in financial markets on the scale of Armageddon.  Had I written my piece two days earlier, the background would have been a sense of renewed optimism that the Paulson bailout, for all its problematic uncertainty, would at least achieve a period of […]

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Communication rather than jargon: what accounting needs

Like the Holy Grail, convergence of financial reporting standards is an ever-receding goal. We may get there one day. But will a unified framework, even with enhanced consistency and comparability, provide investors worldwide with more intelligible accounts? While the harmonization process treads through interminable conceptual minefields, that key question is easily overlooked. Meanwhile, the range […]

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Regulators, rating agencies, accountants, economists: they haven’t a clue.

Accountants are mere recorders, whereas forecasting lies within the province of chartists, economists and strategists. Yet accountants must share at least some of the blame for the lapse in forecasting reliability. After all, investment strategists require indicative source material in the form of financial statements prepared and audited by accountants. The principal justification for today’s […]

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EU politics and accounting extremes: the cure is worse than the disease

The human condition is characterized by periodic swings between lawless permissiveness at one extreme and uncompromising rigidity at the other. Whenever one dominates it falls victim to corrective processes that, in turn, become excessive. Sanity is restored only when the pendulum returns, even briefly, to a position somewhere between. Abuses of vulnerable members of society […]

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Did weird accounting support the credit disaster?

It has been argued that hi-tech accounting wizardry, including the “fair value” principle of valuing current assets at market value, has played a devilish part in the present credit meltdown. After all, it allowed banks to overstate their assets and understate their liabilities with recourse to off-balance sheet “structured investment vehicles” that everyone thought had […]

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“Transparency”? “Accountability”? Not in Westminster or Brussels

Every sizeable organisation puts procedures in place for ensuring that outlays of large sums are given prior authorization and that expense claims are supported by original receipts to show that the expenditure was validly incurred. If such procedures are ineffectively monitored they are open to abuse. Indeed, many of the forensic assignments I have been […]

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Disclosure of auditors’ papers: more misconceived EU regulation

The EU has been at it again. Its Statutory Audit Directive requires auditors ceasing to hold office to give their successors access to all “relevant information” if the successors request it. This misguided dictum is being introduced as an amendment to our Companies Act 2006 and a new Audit Regulation is being drafted. “Relevant information” […]

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